INTEGRATION OF E-COMMERCE INTO THE OPERATION OF WOOLWORTHS
The purpose of this report is an investigation as to how Woolworths adopted an e-commerce system into their business module. This report also uncovers the above mentioned company’s e-commerce initiative, organisational impact on the company and the users of the system.
Woolworths which is a UK retailer was formerly a high street store which customers could walk into and acquire the products desired, but due to some financial difficulties the company went into administration and thereby transitioned into a fully operational online store. This was of high interest to me, as it would be interesting to know how the company is coping with running the new e-commerce system.
Page 2 – Introduction
Page 3 - Description of company
3.1 - Woolworths’ e-commerce Adoption
3.2 - Woolworths’ e-commerce initiative (B2C)
Page 4 - E-COMMERCE FIGURES IN THE UK. FIG 1.1
Page 5 - Woolworth’s e-commerce site ranking. FIG 1.2
5.1 - Organisational Impact
Page 6 - Woolworth’s official site. (Woolworths.co.uk, 2011) FIG 3.1
Page 7 - Percentage of online buyers in the UK, FIG 4.1
7.1 - UK percentage of users online
7.2 - Business Model
Page 8 - E-tailer. (E-commerce business modules, Brunel University 2011) FIG 6.1
8.1 – Critique
9.1 - Conclusion
Page 10 – References
Description of Company
As described above Woolworths Group plc was a British company that had ownership of the formerly popular retail high street chain known as Woolworths, they also own book distributors Bertram books and also entertainment distributor Entertainment UK. The company began in the UK in 1909 under the name of F.W Woolworth & Co. The first of this later large chain of stores which sold stationery, toys and children’s cloths was located on Church Street in Liverpool. In the 1920’s the company expanded and had various chains open in the UK as frequently as two to three weeks. Woolworths as at 2008 had a chain of more than 800 branches in the UK. In 2008 the company went into administration, 27,000 jobs were lost and the high street stores were shutdown. However on the 2nd of February 2009 the company was acquired by SHOP DIRECT GROUP and would continue operation now as a fully internet based retail company.
As earlier described above, Woolworths was one of the UK’s biggest retail chains and therefore can be classified under the retail sector. Retail consists of the sale of goods or merchandise from a fixed location, such as a store, kiosk, by mail or in this case online, in small or individual lots for direct consumption by the purchaser ("Distribution Services". Foreign Agricultural Service. 2000-02-09. Retrieved 2006-04-04.)
An interview by Rosemary Ryan with Woolworth’s group’s chief executive officer, Roger Corbett. Corbett stated the Marketing strategy of the company as “focusing on greater convenience, quality, range and lower prices” (bandt.com, By Rosemary Ryan on 28 January 2003). It is because of the above mentioned market strategy that gave Woolworths the position of one of the leading brands in the United Kingdom’s retail sector. Until hit by the economic turmoil Woolworths pulled their weight in the retail market as a leader.
3.1 WOOLWORTH’S E-COMMERCE ADOPTION
According to the brief history of the rise and fall of Woolworth’s group stated above, thereby necessitating a purchase by the SHOP DIRECT GROUP. After this acquisition occurred, the logical option for the re existence of the once established company was to be resurrected as an internet based online retailer, with the present emergence of the e-commerce industry and online retail it seemed a no brainer that the return of Woolworths be internet based, thereby saving money on infrastructure such as High street buildings and labour in the form of employees.
3.2 WOOLWORTH’S E-COMMERCE INITIATIVE:
B2C - BUSINESS TO CONSUMER.
“Virtually all segments except some senior citizens and lower-income households, are using the Web more than ever to research products. The percentage of Internet usage in the UK has risen from 65% in 2008 to 70% in 2009. The online retail category Clothing, Footwear and Accessories recorded a growth of +22% between June 2008 and 2009. The number of Internet shoppers in the UK is projected to reach 28 million in 2010, accounting for 73% of total Internet users. Multichannel retailer Tesco reached online sales of GBP 1.9 billion in 2009, up by +20% compared to the previous year” (UK B2C E-Commerce Report 2010)
The site Woolworths.co.uk is as clearly stated above is a retail company and are thereby under the retail sector. The e-commerce initiative adopted for the site is a B2C initiative, (B2C standing for business to consumer).
What is B2C?
According to the online Cambridge dictionary, “business-to-consumer: describing or involving the sale of goods or services directly to particular customers for their own use, rather than to businesses” ( http://dictionary.cambridge.org/dictionary/british/b2c), B2C is often sometimes confused with B2B which is also the sale of goods but unlike B2C the users of the goods in B2B are other businesses. Common examples of B2C transactions would be customers buying clothes, shoes, watches, jewellery or any form of merchandise from an online retailer. The most common and well recognised user of B2C e-commerce initiative is Amazon.
Basically Business to consumer applies to businesses, organisations that vend a certain service or merchandise to customers online who in turn intend to use the products/services for personal uses. In the late 90’s and especially at the beginning of the millennium, there were some troubling periods for B2C e-commerce. There was a mass closure of e-commerce run sites and it seemed at that time there would be a premature death to the online form of doing business, however as years progressed there was an onslaught of consumers on various online retail sites. There has been so much growth in this sector that is projected in a report that
“Online retail sales in the United States could reach $248.7 billion by 2014, growing 60 percent from 2009”. (US E-COMMERCE STATISTICS, 2010). According to marketing terms, in the late 20th century B2C was largely responsible for quick growth of the commercial internet.
(Karin Von Abrams, 2008)
E-COMMERCE FIGURES IN THE UK. FIG 1.1
Woolwoths e-commerce site ranking. FIG 1.2
5.1 ORGANISATIONAL IMPACT
This part of the report illustrates the impact of e-commerce initiative on Woolworths and the kind of changes Woolworths had to make before implementing an e-commerce initiative in the organisation.
Woolworths the former high street retail giants went into administration in 2008, however after acquisition by Shop Direct Group the company where looking for continuity ergo the creation of Woolworths.co.uk, a B2C (Business to consumer) e-commerce based site.
When the Organisation announced it was going into administration, there were certain changes that the company had to go through in order to re sell and transformed into a B2C e-commerce site.
Dispose of over 800 stores: Due to the recession and the closure of the high street retailer the formerly occupied assets had to be sold off in order for the deal to go through. (BBC, 2008).
Drop of thousands of staff members, which increased unemployment in the industry: As a result of the sale of the stores, it was only normal that there would be a massive lay off of employees, thereby increasing the level of unemployment in the retail industry. (BBC, 2008).
Construction of a better online retail site: After acquisition creating an online retail store was a very important step in the reconfiguration of the organisation. The Chief executive of Owning company (Shop Direct Group), Mark Newton-Jones spoke about how fast it took to establish a fully functional e-commerce site. "From acquiring the brand to launching, it has only been 20 weeks," and he also stated that this is "something you could never achieve with a high street business but can do online".(athernet, 2009)
Woolworth’s official site. (Woolworths.co.uk, 2011) FIG 3.1
Continuity: Stating the obvious, the first and most important organisational impact of the e-commerce initiative was Continuity for an organisation that was struck hardly by the recession and needed a way to continue operation.
Cost Efficiency: Woolworths as at the date final closure had in excess of 800 high street stores and thousands of employees, getting such infrastructure to re establish the organisation was practically infeasible. Thus Woolworths.co.uk was created, the e-commerce site was a more economic and effective way of operating, the facilities required for running an online retail business are but a fraction of what it would entail if set up as high street stores, also other things such as maintenance and size of staff would also be minimal thereby reducing cost of operation (http://www.buzzle.com/articles/advantages-and-disadvantages-of-electronic-commerce-e-commerce.html).
24 Hour Operation: Time restriction become nonexistent when operating a business online, thus customers of Woolworths are now able to access all products and services at any time of the day or night without any time restrictions, weekends and holidays included. This could also in turn lead to an increase in profits and sales.
WIDER BRAND NAME RECOGNITION: In e-commerce one of the greatest advantages is that there is greater brand awareness nationally, internationally or globally. Not that there isn’t already a wide recognition of the brand Woolworths but once a business is on the internet there is no longer any geographical restriction. Besides those who for some reason where not aware of the retailer have unlimited access to the store online.
(E-marketer newsletter, 2009).
Percentage of online buyers in the UK, FIG 4.1
7.1 UK PERCENTAGE OF USERS ONLINE, FIG 5.1
From the above diagrams it is shown that although there was a period of recession, there is still a steady growth of people patronizing e-commerce sites from 72.7% in 2010 to 73.7% in 2011, Also the percentage of people using the internet in the UK is almost as high as any other country. 62.9% last reported as active UK internet users. This goes to show that e-commerce sites such as that of Woolworth’s actually benefit from the new trend of consumers shopping from the convenience of their various homes (http://www.statistics.gov.uk/cci/nugget.asp?id=8).
Sceptical consumers on security: This has been a reoccurring problem ever since the start of the e-commerce era. Consumers are sometimes reluctant to make purchases online due to fraud and other internet insecurities that might occur. This always reduces customers on a site, and this can be a huge disadvantage.
7.2 Business Model
The new business model of Woolworths.co.uk as meeting the definition of the previous lecture slide is that of an e-tailer, the company is also only exclusively online thereby making it a Virtual merchant. What is an e-tailer? According to www.yourdictionary.com an e-tailer is “a retail business that sells goods online over the Internet from a website” (http://www.yourdictionary.com/e-tailer). Formerly the Woolworths brand when still in existence on the high street and had a corresponding site business model would have been referred to as brick and click being that it exists physically on the high streets and also has a virtual presence.
E-tailer. (E-commerce business modules, Brunel University 2011) FIG 6.1
This section of the report will give a critical review and evaluation of e-commerce adoption by Woolworths.
My personal evaluation of the e-commerce site that is Woolworths.co.uk is that it is still a work in progress and needs more constructive work put into it. After weeks of research and several visits to the official site, it would be wrong to state that the creation of Woolworths was a complete failure, being that the site has only been in operation for a couple of years. Using the website personally I encountered several problems.
Poor customer service: One of the many disadvantages of e-commerce sites is that there isn’t any physical relationship between the buyer (consumer) and the seller (in this case Woolworths). However there have been easy and effective solutions for customer relations such as simple e-mails and other methods. However after several mails sent by me concerning various product clarity and enquiries there was only a response once and even then not specific enough. Below is a review extracted from Ciao.com by a customer of Woolworths.
“My experience with Woolworths.co.uk - they are:
Cowardly and rude. They apparently had a problem with my order for a full week, cancelling within a few hours of the expected delivery, but I still have not received a single email from their customer services to apologise for a problem, to explain that my order has been cancelled, or to explain why. Three emails asking these questions have had the questions entirely ignored. Not a single human response from Woolworths.co.uk has apologised for their mistakes or delays.
Liars. They updated my order in my account on their website, adding the information that the product was no longer available. The product was still available on their website. I included the link to the available product in my emails to support. For some reason, they did not respond to this.
Thieves. For some reason, they elected to give me a partial refund for an order that was never sent. They did not email me to tell me this. I only knew of this due to contact from my financier. I can only imagine with how many of their customers they have tried this trick, although my personal experience with Woolworths.co.uk tells me that they try to steal money from 100% of their customers.
0.0 out of 5.0 Stars.
Companies are run by people, and people make mistakes. Mistakes are acceptable. Lying is not acceptable. Stealing is not acceptable. Rudeness is not acceptable.”
Below par interface: This might not be much of a major concern for some customers, but to a reasonable percentage of consumer site aesthetics is very important in holding their attention. Due to how fast the e-commerce site was constructed, it could be said that not enough consideration was put into the design of the site.
In final conclusion I believe that the e-commerce initiative adopted in Woolworths was part success part failure for the time being. I say this because there hasn’t been enough time to really evaluate fairly enough due to the fact that the website was in operation only in 2009, It could also be said that the e-commerce adoption could be more of a success rather than a failure merely for the fact that it created a way for the continual existence of an organisation once doomed for end. The only thing which I suspect would be done differently by Woolworths.co.uk would be better presentation of the website, quality customer service and a well defined plan for the future progression of the company.